The job market is becoming more competitive these days, and it’s become very important to start planning your child’s future early in order for them to be successful in life. According to Statista, in 2022, over 2.19 million students were enrolled in post-secondary institutions in Canada.

In 2020, 69% of children in Canada under the age of 18 had some sort of savings put aside for their post-secondary education. You can do this too for your child by setting up a Registered Education Savings Plan (RESP). In this article, we’ll go into detail on how starting an RESP after birth can help lead to career success. 

Understanding RESPs 

An RESP is a savings account that has tax-advantages which is designed to help families save for their child’s post secondary education. Some of the features of RESPs are: 

• They can be used for a number of post secondary programs which can include apprenticeships, colleges, and university. 
• Any contributions made into one of these accounts allow for the money to grow tax-free until you withdraw it. This can help to increase how much is saved and is available when you’re ready to pay for educational expenses. 

RESPs can provide parents with a smart and safe way to save money to pay for their children’s future education due to the tax benefits and grants you could receive. 

The Importance of Making Early Contributions 

Starting an RESP after a child’s birth allows for families to take advantage of the many benefits they offer. When you make early contributions it can make a difference in the following ways. 

1. Promotes Money Growth

When you start an RESP you’ll find it’ll benefit your child in the long run with the amount of compound interest that it’ll accumulate. By making small contributions consistently from birth, you can take advantage of a lot more money when the child turns 18 and is ready for post secondary education.

For example, if you save $100 per month when the child is born with a 5% return, you could save up to $27,000 for educational costs. This can make the pressure of sending them off to college a bit easier, as it reduces the fees of normal payment plans which can sometimes be expensive. 

2. Promotes Financial Discipline and Responsibility 

Starting an RESP early helps to encourage families to get used to a saving mindset. This financial discipline is not only good when saving for future education, but it can also promote saving habits in your everyday life. This can make both the parent and the children more financially responsible. Over time as the child gets older you can teach them the importance of saving for their future education which can in turn teach them the value of money. 

The Impact of Educational Savings and Career Opportunities 

The overall impact of saving for your child’s education early and career opportunities can include but isn’t limited to: 

1. Expanding educational opportunities: With access to more finances when the time comes it allows a child to follow their preferred field of learning without worrying about if they can afford it or not. By having the money there they may be able to go into a more advanced and costly degree which can lead them to a higher paying career long term. 
2. Competitive edge in the job market: In some cases employers often look for candidates which offer advanced skills when it comes to education. Children whose education has been paid, and they have completed the course, have a higher chance of scoring a job that may have a lot of competition vying for it. 
3. Reduce financial stress: If a course is prepaid, it allows for the student to be able focus more on their career than having to worry about the financial stress it may bring. There won’t be a need to take out student loans and students won’t have a college debt hanging around them as they try to navigate their new adult life. 

Endnote

When it comes to saving for your child’s future education, it’s a good idea to start at birth. By taking the time to research about RESPs and how they can help your child’s future, you have the potential to give your child a great start at learning a new career without the need to worry about money and debt.